Dynamic Forces Affecting Strategic Decision Making Process Essay.

Produce a 2,000-word critical review of literature and resources of researching key dynamic forces impacting on business and society their relationship between such forces in terms of effective strategic decision making. The literature should include review of the drivers of social change; International dimensions; and Social and cultural diversity. 

The aim of this task is to provide a brief overview of the key dynamic forces affecting the strategic decision making process of a company. The essay talks about a critical review of the literature of the dynamic forces that impact the change in an organization. Further, it also talks about the relationship between the decisions taken by the company and the dynamic forces affecting that. The latter part of the essay talks about the review of drivers of social change and international dimension. The business environment of an organization refers to the internal and external factors which affect the different activities organized in the company. The environment includes both internal and external factors that impact the growth of the organization (Srdjevic, Bajcetic, and Srdjevic 2012). The external dynamic factors that affect the decision making process of an organization are determines through PESTEL Analysis. The analysis includes political, economic, social, technological, environmental and legal factors affecting the activities of the business. These factors create an impact in both positive and negative way in the environment of the organization. These macro environmental factors have direct impact on the activities and decisions making process.

According to Armstrong, Kotler, Harker, and Brennan, 2015 the initial factor which affect the business environment is the political factor, the political factors refers to the activities of the public and non-public institutions that affect the environment of an organization. The public institutions include government, government agencies, statutory bodies etc. and non-public institutions include groups representing society, NGOs etc. Further, it should be noted that this aspect includes the actions taken by the above mentioned bodies that reflect on the decision making process of a company. The political factors is further segregated in macro and micro political factors; the macro factors includes activities like war results, change in the government and micro factors includes political risks such a taxation policy, regulations imposed by the government on industries (Vecchiato, and Roveda 2010). The organizations present in business environment monitor their activities so that they do not face political risk. Such risks might affect the company in good or bad ways, in good ways like the government can provide subsidy to specific industries which positively impact the growth of the company. And in negative ways like, suddenly the government gets changed which can greatly affects ongoing contracts of the organization with the governmental bodies. Along with political factors, in the view of Lawrence, and Weber, 2014 the economic factors that affect the business environment refer to the factors related to the economies of the country like inflation, import, export etc. the economic factors have a direct impact on the profit generation activities of the business. An organization’s day to day activities get affected with the economic factors of the country. Further it is also segregated into micro and macro-economic factors, the micro factors includes activities related to the people spending incomes and the macro factors includes demand and supply issues and governmental control on businesses and policies related to that. With respect to Tian, and Martin, 2011, the social factors are also among the dynamic factors impact the activities and environment of business. It refers to the factors that involves shared belief and attitude of population towards the certain product or services which they provide in the market. Population growth rate, unemployment rate, taste and preference etc. becomes a part of the social factors. Further the cultural factors that impact the activities of a business are also social factors. These factors particularly talks about the interest of the people and how they impact on the products and services served in the market. The social factors are one of the most influential factors as it talks about the trend prevailing in the target market. Talking about the drivers of social of change, it should be noted that perception of people is the biggest driver of social change. This aspect influences changes in the organization which gives rise to social change. Further the technological factors have now emerged in a greater sense that affects the activities of a business in long run. Technological factors refer to the technological changes present in the industry that directly impacts on the growth of the company. If the organization is present in an industry where technical changes appear in every short span of time then it becomes difficult for them to attain that technology and use it in the production in order to be competent. Further, Koulopoulos, and Keldsen, 2016 said that use of technology makes an organization competent enough to lead the target market; but it can also harass the success attained through it as it is not easily for all organizations to adapt hi-tech techniques in their business. Next comes the environmental factors that talks about the changes in the nature affecting the activities of an organization. Now days, societies are getting more concerned towards the environment and nature and they want organizations to adhere their corporate social responsibility and initiate activities for the sustainability of the nature. If activities are not fulfilled then the government of the country might impose penalties to the companies. Lastly, legal factors present in the environment talks about the aspects that relate to the law present in the environment. Customer rights, labour laws, equal opportunity, right to information etc. are some of the laws which form a part of the legal factors present in the environment. Further, it is important for the organizations to follow the legal code of procedure present in the environment in order to trade successfully. Also the organizations trading internationally needs to comply with the laws and regulations of all the countries (Meissner, and Wulf 2013). 

PESTEL Analysis

The above mentioned are the key dynamic forces that affects the business in the external environment. These sources have direct link with the activities initiated in an organization. As the organization works in an external environment so all the changes present in that environment will affect the business as well. Positive change in environment might positively impact the decision making process of one organization but it might not affect positively to other. For instance, if the government of the country decides to provide subsidies to the leather manufacturing organization and reduces the profit margin of leather shoes. So, for leather manufacturing organizations it will affect positively as they can earn more profits by producing more leather. But for the leather shoes making organizations, it will impact negatively as they will purchase the leather at same price and sell it by reducing the profit margins. Thus, it will affect the decision making process of both the organization as one organization will positive increases the sales while organization will reduce the sales. According to Issa, Chang, and Issa, 2010, it should be noted that the way in which an organization will make decision is based on the impact of the external factor and this impact might vary from organization to organization. An organization can take effective decision only when they have adequate knowledge of the target market. Additionally it should also be noted that the dynamic factors are important tool which helps the company to initiate accurate decisions as the decision making process requires a strategic evaluation of all the factors present in the environment which can influence the activities of the business in any way. So, this process helps in analyzing those factors and taking adequate measures to solve the problems proactively. According to Kiptoo, and Mwirigi, 2014, when it comes to the process of decision making, it is important for organizations to attain all the information and then analyze the strategies to apply on the business. So, it should be noted that a decision can only effective only when it is taken considering all the dynamic forces present in the market. These forces help an organization to build fail proof plan which helps in growing in the external market. Also, the dynamic capabilities present in the external factors helps in identifying opportunities and threats for the business. This factor also helps an organization in evaluating the favorable conditions resent in the international environment which can helps an organization to expand. It talks about polies and culture of foreign countries in which an organization can grow. Thus, it should be noted that such information is immensely valuable in building strategies which are effective and efficient as well (Gohel, and Gondalia 2013).

Political factors

As all organization wants to use the dynamic forces in such a way that it brings positive outcomes for them, so it should be noted that they initiate strategic decision making process that positively help the company in its future growth. As discussed above that the dynamic forces present in the environment might show positive or negative response to the activities of the company. So, the company present in the environment aims to use their resources and capabilities in such a way that it satisfies the objectives of plan by considering the dynamic forces. The organizations use the dynamic forces present in the industry and combine it with the resources to fulfill the objectives of the organization. A strategic set of response is created using the decision making techniques so as to respond to the key dynamic forces present in the contemporary business world. The organizations aims to cover all these losses occurred with the change in the external factors and reciprocate it with the positive outcomes for the company. Depending upon the negative dynamic forces affecting to growth, the company initiated techniques accordingly (Njeru, Stephen, and Wambui, 2013). Like, changes in the economic environment can be rectified through changing the strategic choices and product development process. Thus, it should be noted that every organization’s response to the key dynamic forces are different depending upon the type of impact the external dynamic forces lay on them. If the organizations receive positive response from these forces then they aim to use it more so as to earn more profits, but if negative response is received to the company then they aim to use these forces in such a way that it does not affect to objectives of the company. The external environment is turbulent and ever changing which makes it difficult for companies to maintain their growth. Thus, the external forces somehow help the organization in analyzing and evaluating the market conditions which can help in their sustainable growth (Wang, Chen, and Chen 2012).

As discussed earlier that the dynamic factors adequately drives changes in the organization, also Ackermann, 2011, said that it is important for an organization to change according to these factors in order to remain competent in the external environment. There are many decision making tools that analyze the contemporary drivers for change present in the environment. Market research is the prime and foremost decision making tool, as it helps in evaluating the attributes present in the environment that are likely to change (Babatunde, and Adebisi, 2012). Market research refers to the process of gathering information about the industry in which an organization prevail such as the government regulation, taste and preference of customers, buying behavior of customers etc. The market research is an important tool in the process of strategic planning and decision making because it gives a vision to the company about the requirements of the customers which can help the management team of the organization to prepare mission and goals accordingly. Also, Tung, Baird, and Schoch 2014, evaluated that market research will analyze the above mentioned dynamic forces present in the environment and inform the company about the risks coming in their way. Through this the management can take proactive measures to skip the risks. Another tool is the cost benefit analysis which talks about the cost and potential benefits associated with different activities of the organization. This process basically helps an organization in choosing the best option which can provide maximum benefits to the company. Relation it to the contemporary drivers for change, it should be noted that this process helps the organization to opt for an option which provides maximum profit margin to the company by initiating a decision. Also this process identifies the opportunity cost of an event and helps in taking adequate decisions for the betterment of the organization (Crisp, and Turner 2011). For instance, a project is expected to provide ‘x’ amount of costs and ‘y’ amount of benefits to the company but with the change in the taste of customers, the company attains another tender under which they can earn more profits than the project 1. So, according to the cost benefit analysis, the company should go with the second project which provides them better benefits according to the market fluctuations. Thus, in the limelight of above mentioned event, it should be noted that the analysis of the dynamic forces is very important for an organization as it evaluates the changes which can happen in the management. Evaluation of these changes also talks about the five forces which majorly impact on the decision making process of the company. Thus above mentioned literature critically reviews the relationship of an organization with these forces and how they affect them in their strategic approach as well. 

References

Ackermann, F., 2011. How OR can contribute to strategy making. Journal of the Operational Research Society, 62(5), pp.921-923.

Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.

Babatunde, B.O. and Adebisi, A.O., 2012. Strategic Environmental Scanning and Organization Performance in a Competitive Business Environment. Economic Insights-Trends & Challenges, 64(1).

Crisp, R.J. and Turner, R.N., 2011. Cognitive adaptation to the experience of social and cultural diversity. Psychological bulletin, 137(2), p.242.

Gohel, H. and Gondalia, V., 2013. Executive information advancement of knowledge based decision support system for organization of United Kingdom. International journal of advanced and innovative research, pp.41-50.

Issa, T., Chang, V. and Issa, T., 2010. Sustainable business strategies and PESTEL framework. GSTF International Journal on Computing, 1(1), pp.73-80.

Kiptoo, J.K. and Mwirigi, F.M., 2014. Factors that influence effective strategic planning process in organizations. Journal of Business and Management, 16(6), pp.188-194.

Koulopoulos, T. and Keldsen, D., 2016. Gen Z Effect: The Six Forces Shaping the Future of Business. Routledge.

Lawrence, A.T. and Weber, J., 2014. Business and society: Stakeholders, ethics, public policy. Tata McGraw-Hill Education.

Meissner, P. and Wulf, T., 2013. Cognitive benefits of scenario planning: Its impact on biases and decision quality. Technological Forecasting and Social Change, 80(4), pp.801-814.

Njeru, N.E., Stephen, M.M. and Wambui, M.A., 2013. Analysis of factors influencing formulation of strategic plans in Embu North District, Embu County, Kenya. Global Business and Economics Research Journal, 2(5), pp.116-129.

Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the criteria set for multicriteria decision making based on SWOT/PESTLE analysis: a case study of reconstructing a water intake structure. Water resources management, 26(12), pp.3379-3393.

Tian, X. and Martin, B., 2011. Impacting forces on ebook business models development. Publishing research quarterly, 27(3), p.230.

Tung, A., Baird, K. and Schoch, H., 2014. The relationship between organisational factors and the effectiveness of environmental management. Journal of environmental management, 144, pp.186-196.

Vecchiato, R. and Roveda, C., 2010. Strategic foresight in corporate organizations: Handling the effect and response uncertainty of technology and social drivers of change. Technological Forecasting and Social Change, 77(9), pp.1527-1539.

Wang, C.H., Chen, K.Y. and Chen, S.C., 2012. Total quality management, market orientation and hotel performance: The moderating effects of external environmental factors. International Journal of Hospitality Management, 31(1), pp.119-129.